The big deal: Four global banks agreed today to pay more than $5 billion in penalties and plead guilty to rigging the world’s currency market, the first time in more than two decades that major players in the financial industry have admitted to criminal wrongdoing on such a scale. The Associated Press reports traders at JPMorgan Chase, Citigroup, Barclays and the Royal Bank of Scotland conspired among themselves to fix exchange rates on U.S. dollars and euros, according to a resolution announced by the banks and the Justice Department. The currency traders, who called themselves “The Cartel,” allegedly shared customer orders through chat rooms and used that information to profit at their clients’ expense. Read the full story.
Reading the tea leaves: Federal Reserve policymakers were divided at their April meeting over whether the economy’s winter weakness was temporary or might last longer. But they generally agreed that June would be too early to start raising interest rates. The Associated Press reports that while “a few” Fed officials believed that the U.S. economy would be ready to raise rates in June, they were outnumbered by “many” Fed officials who viewed it as “unlikely” that the economic data would be strong enough to justify a hike next month. The opposing views were revealed in the minutes of the Fed’s discussions at their April 28-29 meeting. The Fed has kept its key rate near zero since December 2008.
Upon further review: If there was one thing most economists agreed on at the start of the year, it was this: Plunging oil prices would boost the U.S. economy. It hasn’t worked out that way. The economy is thought to have shrunk in the January-March quarter and may barely grow for the first half of 2015—thanks in part to sharp cuts in energy drilling. And despite their savings at the gas pump, consumers have slowed rather than increased their spending. Cheaper oil and gas had been expected to turbocharge spending and drive growth, more than making up for any economic damage caused by cutbacks in the U.S. oil patch. So what did the economists get wrong? The Associated Press has the full story.
